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Thursday, April 24, 2014, 6:02 pm

California wine shipments rise 3% by volume, 5% by revenue

Nielsen: Consumers willing to spend a bit more on wine than before

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    California wine shipments 2013The volume of California wine shipments to U.S. markets returned to growth mode last year, after dipping in 2012, while the dollar value of those shipments slowed in 2013 following two years of strong growth, according to figures released Thursday.

    The equivalent of 214.6 million 9-liter cases of wine were shipped from California to domestic markets last year, an increase of 3.1 percent, according to estimates by Woodside-based Gomberg, Fredrikson & Associates and San Francisco-based Wine Institute. That’s still not back to the recent peak of 216 million cases in 2011.

    Yet, the estimated retail value of California wine bound for the U.S. continued a four-year upward climb, increasing by 5.0 percent last year from 2012 to $23.1 billion. Growth slowed from 8.6 percent in 2011 and 8.4 percent in 2012.

    Wine from the Golden State to all domestic and international markets increased 3.0 by volume last year to 258 million cases.

    “With two record winegrape harvests in 2012 and 2013, California wineries were able to meet consumer demand, and these recent vintages are receiving high praise worldwide,” said Bobby Koch, Wine Institute president and chief executive officer.

    Highly competitive wine market

    “In 2013, wineries gradually released the highly acclaimed wines from the large 2012 California harvest, offsetting the slowdown in American wine market growth due to short vintages in 2010 and 2011 and continuing soft economic conditions,” said wine industry consultant Jon Fredrikson of Gomberg, Fredrikson & Associates. “In response to these market factors, California wineries focused on sales of premium table wines priced at $10 and above, which increased by 9 percent in volume and made up nearly half of winery revenues.”

    Last year remained a highly competitive wine market, Mr. Fredrikson said.

    The U.S. Tax and Trade Bureau approved nearly 99,000 wine label registrations, the majority of these from foreign producers. That crowded trade channels and vied for consumer attention and shelf space, he noted.

    In addition, over the past five years the number of alcohol-production permits increased by 4,100, up 47 percent. Those were not only for new wineries but also for craft breweries, distilleries and cider producers, expanding the beverage mix, Mr. Fredrikson noted.

    The large number of beverage-alcohol products continued to squeeze distribution channels, according to the report. Many small- and medium-sized wineries looked to direct-to-consumer sales through tasting rooms, wine clubs, online marketing and other direct sales channels, using social media and other digital communications to reach out to consumers.

    Retailers step up their game

    Brick-and-mortar retail outlets selling wine continued to increase, expanding by 62,000 locations over the last five years, up 12 percent to 550,000 outlets, according to figured the Wine Institute cited from the Nielsen Company, which tracks what consumers watch and buy.

    “Retailers are stepping up their game with more sales locations, making wine more accessible to consumers than ever before,” said Danny Brager, senior vice president of Nielsen’s Beverage Alcohol Practice Area. “Consumers have also shown that they’re willing to spend a bit more on a bottle of wine than in previous years.”

    The most popular wines last year in U.S. stores Nielsen tracks were chardonnay, with 20 percent share of sales; cabernet sauvignon, 13 percent; merlot, 9 percent; red blends or sweet red wines, 9 percent; pinot grigio, 9 percent; followed by moscato, 6 percent; white zinfandel, 5 percent; pinot noir, 4 percent; and sauvignon blanc, 4 percent.

    Sales of moscato, malbec and red blends grew by double digits, according to Nielsen. Pinot grigio and pinot noir exhibited had the next-strongest growth.

    U.S. market

    Wine shipments to the U.S. from all production sources—California, other states and foreign producers—grew 3 percent to 375.2 million cases with an estimated retail value of $36.3 billion. This represents 21 consecutive years of volume growth. The U.S. has been the largest wine consuming nation in the world since 2010. California’s 215 million cases shipped within the U.S. represent a 57 percent share of the U.S. wine market.

    Sparkling wine and Champagne

    Lifted by the popularity of Prosecco, shipments of sparkling wine and champagne to the U.S. reached 18.4 million cases in 2013, up 4 percent over the previous year.

    Exports

    U.S. wine exports, 90 percent from California, reached $1.55 billion in winery revenues in 2013, an increase of 16.4 percent compared with 2012. Volume reached 435.2 million liters, or 48.4 million cases.

    The European Union was the top destination for U.S. wine exports, accounting for $617 million, up 31 percent compared to the previous year; followed by Canada, $454 million, up 12 percent; Japan, $102 million, down 7 percent; Hong Kong, $78 million, down 12 percent; China, $77 million, up 6 percent; Mexico, $22 million, up 21 percent; South Korea, $18 million, up 16 percent.

    By the numbers

    California wine shipments

    1998–2013, millions of 9-liter cases
    Year To U.S. and abroad To the U.S. Retail value for U.S. shipments2
    2013 258.2 214.6 $23.1 billion
    2012 250.6 208.2 $22.0 billion
    2011 260.6 216.0 $20.3 billion
    2010 242.9 200.7 $18.7 billion
    2009 237.1 196.7 $17.9 billion
    2008 239.8 196.3 $18.5 billion
    2007 233.5 192.3 $18.9 billion
    2006 227.1 188.4 $17.8 billion
    2005 224.1 185.6 $16.5 billion
    2004 219.4 180.1 $15.0 billion
    2003 207.6 175.4 $14.3 billion
    2002 195.2 168.7 $13.8 billion
    2001 188.9 162.8 $13.4 billion
    2000 187.5 164.9 $13.0 billion
    1999 186.4 167.0 $13.0 billion
    1998 181.9 161.9 $12.0 billion

    Sources of preliminary figures and revisions: Gomberg-Fredrikson & Associates and Wine Institute.

    Notes: Excludes foreign bulk shipped by California wineries; to convert to gallons, multiply cases by 2.3775. 1Includes table, champagne/sparkling, dessert, vermouth, other special natural, sake, cider and others. 2Estimated retail value includes markups by wholesalers, retailers and restaurateurs.

    U.S. wine sales

    1998–2013, millions of 9-liter cases

    Wine shipments from California, other states and foreign producers entering U.S. distribution

    Year Table1 Dessert2 Sparkling/Champagne Total Retail value3
    2013 327.7 29.0 18.4 375.2 $36.3 billion
    2012 317.7 28.3 17.7 363.7 $34.6 billion
    2011 305.3 29.9 17.2 352.4 $32.9 billion
    2010 287.1 27.9 15.4 330.4 $30.0 billion
    2009 280.1 26.9 14.0 321.1 $28.7 billion
    2008 273.2 27.2 13.4 313.8 $30.0 billion
    2007 272.0 26.3 13.8 312.1 $30.4 billion
    2006 264.0 24.1 13.6 301.6 $27.8 billion
    2005 256.2 21.9 13.0 291.1 $25.8 billion
    2004 247.7 18.9 13.0 279.7 $24.0 billion
    2003 239.7 16.8 12.1 268.8 $22.3 billion
    2002 232.2 15.6 11.8 259.5 $21.8 billion
    2001 215.4 14.3 11.4 241.4 $20.3 billion
    2000 213.2 13.9 11.8 238.9 $19.2 billion
    1999 199.8 13.0 15.6 228.4 $18.1 billion
    1998 196.0 13.0 12.2 221.2 $17.0 billion

    Sources of preliminary figures and revisions: Wine Institute (volume), U.S. Department of Commerce and estimates by Gomberg, Fredrikson & Associates.

    Notes: Excludes exports; to convert to gallons, multiply cases by 2.3775. 1Includes all still wines not over 14 percent alcohol, including cider. 2Includes all still wines over 14 percent alcohol and sake. History revised based on TTB reports. 3Estimated retail value includes markups by wholesalers, retailers and restaurateurs.

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